Commercial banks’ excess liquidity with the Central Bank of Nigeria (CBN) rose to N9.39 trillion in January 2025, from N1.29 trillion deposited in the same month last year.
The amount shows a growing and healthier liquidity in the financial system.
The amount is also 627.17% higher than the amount the banks deposited in the same period last year.
Data from the CBN shows that commercial and merchant banks used the Standing Deposit Facility (SDF) to deposit excess funds with the bank to attract interest.
The strong SDF shows healthier liquidity in the financial system.
The banks also used the Standing Lending Facility (SLF), a short-term lending facility, to access liquidity from the CBN to run their daily operations.
A report by ThisDay says that the apex bank had shifted to a single-tier structure for the SDF.
According to the report, deposits of a certain ceiling earned a higher interest rate, and amounts surpassing that ceiling earned a lower rate.
The new policy lets all SDF deposits be paid at the Monetary Policy Rate (MPR) less 100 basis points. At the current MPR rate of 27.5%, the SDF stands at 26.5%.
Available data shows that the total amount deposited by the financial institutions in January 2025 surpassed the amount borrowed from CBN.
The banks reportedly borrowed about N9.15 trillion from the apex bank, representing a 158.5% increase over the N3.54 trillion recorded in the same period last year.
Banks’ deposits to CBN rose significantly, hitting N38.12 trillion, representing a 210.15% increase relative to N12.29 trillion in 2023.
SDF saw a significant increase as financial institutions’ deposits hit their peak at N8.12 trillion in August 2024.
The increase comes amid CBN’s removal of the cap on remunerative policy and other hassles.
CBN governor, Olayemi Cardoso, disclosed that the bank removed the cap to boost activity in the SDF window and control liquidity.
CBN introduced a single-tier remuneration structure for its SDF, which applies to commercial banks’ large deposits exceeding N3 billion.
The monetary policy regulator addressed this in a circular signed by Omolara Duke, saying that the CBN had fixed the SDF at 26.5%.
TimesNow.com.ng earlier reported that with the March 2026 recapitalisation barely 14 months away, struggling banks are abandoning initiation public offerings (IPOs) for alternative fund-raising platforms due to regulatory hassles, tough listing requirements, and exorbitant transaction costs.
While marginal players have chosen strategic pitching and rights issues, tier-1 banks scooped 100% of their targeted funds to scale the hurdle.
